Amazon tops OC&C Proposition Index 2012 but other retailers show their mettle
Amazon recorded its third consecutive year at the top of the OC&C Proposition Index 2012 as the progress of dotcom pure-plays and internet-led retailers continues to put pressure on the traditional bricks and mortar players. By Glynn Davis
The survey of 25,000 customers across eight countries rated retailers on 11 different criteria and in four of these Amazon came out tops. This ensured it headed the table again, followed by German health and beauty retailer DM, France-based Picard, Poland’s Allegro, and the UK-based John Lewis.
Launching the research at the recent World Retail Congress 2012 in London, Michael Jary, partner at OC&C, told delegates: "The pure-plays and internet businesses are closing the gap on the bricks and mortar competition. They are building scale, moving into new markets and categories, going international, and investing in big data."
Part of the strength of Amazon, according to Jary, is that it is much more than a retailer: "It’s wrong to talk of it as a retailer as it is building an eco-system around it - including Kindle, content services, hosting, user-generated content, One-Click and Prime – so it controls the whole value chain."
When you add in multi-channel collection lockers, NFC and payments in the future, as well as its ongoing collection of customer data, then it looks impregnable. "The margins left over for conventional retailers are very thin, he says, but adds that there are chinks in its armour.
"It’s similar to the conversation we had about competing with Wal-Mart. Many retailers found a way to compete and it will be the same with Amazon. We’ll have some successful companies," suggests Jary.
The Proposition Index helps highlight some of these very operators who are succeeding because of their unique characteristics. Jary highlights some of these organisations:
For its category authority within cycles Wiggle is picked out, for its service shoe Zappos stands out, for creating a vertically integrated business Card Factory scores very well in this year’s survey.
For a modest-sized UK business it managed to top the scores in two of the survey’s metrics – Low Prices and Value for Money. “We believe vertical integration is returning. This value-based retailer couldn’t find a supplier for reasonable prices so it acquired and built [the capability] and now they do their own design and production. It achieves a 24% net operating margin even as a value retailer,” explains Jary.
For its integration of channels John Lewis ranked highly, as it aligns employee incentives across all its channels, and created a Click & Collect service that is achieving 100% growth, which has helped push online sales to account for 24% of group turnover.
For its focus on deep value Home Bargains is selected by Jary who points to its “clean, bright stores and good customer service” but the key element behind its success is its exclusive own label goods that do not enable any price comparisons with products on Amazon.
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